Tender costings and builder's profit

mrsWhippy

Hi

I'm just looking for a bit of insight into how tender costs are put together - and how contractors generally make their profit.

I've just had tender bids back and have been trawling through the BoQ to try make sense out of it.

I see there is profit added to all PC Sums, and am assuming that the prices for other various building materials will all have a percentage profit included.

I have however seen prices for items such as boilers/velux/cills which I know for a fact we can source for a fraction of the quoted cost, even taking into account the vat discount the builder is entitled to. I accept there is probably going to be an added cost when getting a builder to supply, but I'd have assumed this is in the range of 5-10% and not 50%

In these situations, is it okay to pull these items out to supply ourselves? Do we negotiate with the company? How is it generally done?

Thanks a mil

Edited to add, we do have a QS involved to review, I'm just hoping to understand this a bit better myself first.

JimmyMW

mrsWhippy wrote: »

Hi

I'm just looking for a bit of insight into how tender costs are put together - and how contractors generally make their profit.

I've just had tender bids back and have been trawling through the BoQ to try make sense out of it.

I see there is profit added to all PC Sums, and am assuming that the prices for other various building materials will all have a percentage profit included.

I have however seen prices for items such as boilers/velux/cills which I know for a fact we can source for a fraction of the quoted cost, even taking into account the vat discount the builder is entitled to. I accept there is probably going to be an added cost when getting a builder to supply, but I'd have assumed this is in the range of 5-10% and not 50%

In these situations, is it okay to pull these items out to supply ourselves? Do we negotiate with the company? How is it generally done?

Thanks a mil

Edited to add, we do have a QS involved to review, I'm just hoping to understand this a bit better myself first.

Most likely the 50% is also including fitting, most BOQ's don't break out labor and materials separately in my experiance

mrsWhippy

Thanks Jimmy.

But surely in the case of a rooflight for example, the supplier would fit it themselves?

Supplier to supply+fit+vat = 4k
Contractor to supply+fit+vat = 7.5k

sydthebeat

mrsWhippy wrote: »

Hi

I'm just looking for a bit of insight into how tender costs are put together - and how contractors generally make their profit.

I've just had tender bids back and have been trawling through the BoQ to try make sense out of it.

I see there is profit added to all PC Sums, and am assuming that the prices for other various building materials will all have a percentage profit included.

I have however seen prices for items such as boilers/velux/cills which I know for a fact we can source for a fraction of the quoted cost, even taking into account the vat discount the builder is entitled to. I accept there is probably going to be an added cost when getting a builder to supply, but I'd have assumed this is in the range of 5-10% and not 50%

In these situations, is it okay to pull these items out to supply ourselves? Do we negotiate with the company? How is it generally done?

Thanks a mil

Edited to add, we do have a QS involved to review, I'm just hoping to understand this a bit better myself first.

its most probable that the BOQ figure is the 'supply and fit' cost.. therefore supplying yourself for the builder to fit wont save much.

eg ive often seen figures for "internal doors" in BOQs at, lets say €700... and clients see the cost of a door in their local b+q for €150 and think they are getting shafted. However the BOQ figure would include the cost of the door, delivery costs, frame costs, hinge costs, door handle costs, spindel costs, lock costs, door stop costs, costs to remove ironmongery and re-fix after painting, shrink wrapping, and most of all, fitting costs.

also, a builder is allowed to add up to 5% on PC sums in most contracts to cover unseen costs such as costs to view products with clients etc.

kkelliher is the man to comment on this i think

JimmyMW

mrsWhippy wrote: »

Thanks Jimmy.

But surely in the case of a rooflight for example, the supplier would fit it themselves?

Supplier to supply+fit+vat = 4k
Contractor to supply+fit+vat = 7.5k

Rooflights yes but Velux's no. Im not sure about the example above, just make sure you are pricing like with like.

Sausage dog

Be careful what you remove from the builders side of things and ensure you are comparing a complete job with a complete job. Builder may also charge for work around it, to facilitate it, get it ready or make good. This is maybe more relevant with a renovation than a new build though. Every little thing costs money.

Gumbo

Sausage dog wrote: »

Be careful what you remove from the builders side of things and ensure you are comparing a complete job with a complete job. Builder may also charge for work around it, to facilitate it, get it ready or make good. This is maybe more relevant with a renovation than a new build though. Every little thing costs money.

+1

Don't let the builders price of 9k for windows freighter you when you get quotes separately for 8k. Someone has to remove the old windows, patch reveals internally and externally and finish both sides.


*figures picked for an example.

Victor

mrsWhippy wrote: »

But surely in the case of a rooflight for example, the supplier would fit it themselves?

Supplier to supply+fit+vat = 4k
Contractor to supply+fit+vat = 7.5k

Suppliers supply, they do not fit.

Does you €4,000 cost include framing the roof for the roof light, flashings, insulation, and trimming, etc?

While you may find things that are higher than you expected, there may also be things lower than you expected. Are you chasing them also?

If you take all the things you think are expensive out of the contract, does the builder have enough to complete the contract, are you happy to end up in years of contractual disputes, arbitration and/or litigation?

V0X

We are currently building. At tender stage we asked the builder if we could pull our window schedule from the Tender to enable us to get better quotes.

The window company supplied and fitted and the builder added 5% mcd to the price we got directly from window company.

That said I would be reluctant to remove things. Sourcing items yourself leaves you liable for any construction delays etc.. Your hands will be full making other decisions.

I would find the best tender then sit down with the builder and talk through any items you are unhappy about cost wise. You will always be able to source things cheaper but normally the difference is installation costs.

When you have an active build you get more of an appreciation of the amount of labor that goes into a one off build. Our tendered build costs were a fair bit higher than the figures you see on boards. There was also a very large variation between 5 tenders we received back.

BryanF

V0X wrote: »

We are currently building.
..
Our tendered build costs were a fair bit higher than the figures you see on boards.

we would welcome more input from on-going self-builds when cheap prices are being discussed.

mrsWhippy

V0X wrote: »

We are currently building. At tender stage we asked the builder if we could pull our window schedule from the Tender to enable us to get better quotes.

The window company supplied and fitted and the builder added 5% mcd to the price we got directly from window company.

That said I would be reluctant to remove things. Sourcing items yourself leaves you liable for any construction delays etc.. Your hands will be full making other decisions.

I would find the best tender then sit down with the builder and talk through any items you are unhappy about cost wise. You will always be able to source things cheaper but normally the difference is installation costs.

When you have an active build you get more of an appreciation of the amount of labor that goes into a one off build. Our tendered build costs were a fair bit higher than the figures you see on boards. There was also a very large variation between 5 tenders we received back.

Thats very helpful, thanks.

As I said before, I'm trying to get a better understanding of where these costs are coming from before approaching the builder. We will be supplying & fitting our own windows too btw, its such a huge cost. I'll definitely be less inclined to pull extra items now though, we will have enough to deal with with floors, bathrooms & kitchens as it is.

Anyway hope when we meet with the builder we can discuss the installation costs in more detail, its just some of them appear so arbitrary.

mrsWhippy

BryanF wrote: »

we would welcome more input from on-going self-builds when cheap prices are being discussed.

Ours are too. No where near the mad low figures you see being thrown about. Having said that, our lowest bid was spot on the initial QS estimate, the other 4 were up to 100k more.

Gumbo

mrsWhippy wrote: »

Ours are too. No where near the mad low figures you see being thrown about. Having said that, our lowest bid was spot on the initial QS estimate, the other 4 were up to 100k more.

Extension?
New build house?
Square footage?

mrsWhippy

kceire wrote: »

Extension?
New build house?
Square footage?

New build - 155 sq.m

V0X

mrsWhippy wrote: »

Thats very helpful, thanks.

As I said before, I'm trying to get a better understanding of where these costs are coming from before approaching the builder. We will be supplying & fitting our own windows too btw, its such a huge cost. I'll definitely be less inclined to pull extra items now though, we will have enough to deal with with floors, bathrooms & kitchens as it is.

Anyway hope when we meet with the builder we can discuss the installation costs in more detail, its just some of them appear so arbitrary.

No problem. We are nearing the end of our build and probably experienced many of the same headaches you are dealing with so feel free to ask me any questions.

V0X

BryanF wrote: »

we would welcome more input from on-going self-builds when cheap prices are being discussed.

From our tenders I would estimate a cost of 2000-2400 ex vat per sqm in Dublin. This is for a fully finished house ready to move into with no allowance for soft landscaping.

We did not design our house to minimise costs. It is contemporary with significant amounts of glazing.

daphne

Can't help commenting here to MrsWhippy. Now that you've tendered, make sure the specification is agreed in writing if you haven't already in the docs/drawings you sent out for tender. the level of finish/specification of the materials makes a huge difference in tender costs. Builders will price to get job, i.e., allow for cheapest possible/lowest specification - be as specific as possible at this stage with regards to materials or at least make allowance for these.

Also, consider what is/is not included in terms of landscaping and garage etc. Generally I'd imagine a builder will include these at a price you're not likely to match later. You won't get a cheaper garage in the future and the headache of dealing with more builders to get your outdoor area sorted out is worth avoiding IMO!

Would also say that per sq m numbers are helpful but without some detail on the spec of the house, they are meaningless. A contemporary house with big spans, lots of glazing and high energy finish (UFH, A2W heat pump etc) will have considerably more cost than standard build. Then add the variables of personal preferences with regard to floor finishes, kitchens, built in furniture, and building fabric materials such as roof slates, windows, stone clads etc and the overall cost varies hugely. I also imagine that in the last 12 months, tender prices in general have risen dramatically.

BoardsMember

Interested in the above. If the cost of the windows is in the contract, does this mean that there is no point researching/shopping around for windows before you go out to tender? Or would you/could you direct the builder that you want CompanyX to supply their Window Code 123? I'm not too clear about how things like this, sanitary, tiles, flooring etc work.

Victor

BoardsMember wrote: »

Interested in the above. If the cost of the windows is in the contract, does this mean that there is no point researching/shopping around for windows before you go out to tender? Or would you/could you direct the builder that you want CompanyX to supply their Window Code 123? I'm not too clear about how things like this, sanitary, tiles, flooring etc work.

There are different routes.

1. The client (in reality the project team) can specify a particular product, e.g. Dulux Easycare Washable Matt Primrose Yellow.

2. The client can specify a particular supplier (to be paid through the main contract), e.g. window type X from manufacturer Y.

3. The client can specify a particular installer (to be paid through the main contract), e.g. kitchen fitter Z to supply and install kitchen cupboards and appliances.

4. The client can engage in direct contracts, e.g. fit carpets after the contract is finished. Doing this during the contract is ripe for problems and claims as the two contractors have few responsibilities to each other.

The problem with any of these options is maintaining quality, time and cost and minimising headaches all round.